1.

Accounting is a service activity and its function is to provide quantitative information, primarily financial in
nature, about economic entities, that is intended to be useful is making economic decision. This accounting
definition is given by
a. Accounting Standards Council
b. AICPA Committee on Accounting Terminology
c. American Accounting Association
d. Board of Accountancy
2. All of the following describe accounting, except
a. A service activity
b. An information system
c. A universal language of business
d. An exact science rather than an art
3. The important point made in the definition of accounting include all of the following. Except
a. Accounting information is quantitative
b. Accounting information is both quantitative and qualitative
c. Accounting information is financial in nature
d. Accounting information is useful in decision making
4. This accounting process is the recognition or nonrecognition of business activities as accountable events.
a. Identifying
b. Measuring
c. Communicating
d. Reporting
5. The events that affect the entity and in which other entities participate are known as
a. Internal events
b. External events
c. Current events
d. Obligating events
6. Which of the following statements is incorrect in relation to accountable event?
a. An event is accountable when it has an effect on asset, liability or equity
b. The subject matter of accounting is the measurement of economic resources and obligations
c. Only economic activities are emphasized and recognized in accounting
d. Sociological and psychological matters are quantifiable
7. What is the “measuring” component in the definition of accounting?
a. The recognition or nonrecognition of business activities as accountable events
b. The assigning of peso amounts to the accountable events.
c. The preparation and distribution of accounting reports to users of accounting information.
d. The preparation of audit reports by CPAs.
8. The most common financial attribute used in measuring financial information is
a. Historical cost
b. Current cost
c. Realizable value
d. Present value
9. The “communicating” process of accounting includes all of the following except
a. Recording
b. Classifying
c. Summarizing
d. Interpreting
10. What is the overall objective of accounting?
a. To provide the information that the managers of an economic entity need to control the operations
b. To provide the information that the creditors can use in deciding whether to grant loans to an entity.
c. To measure the periodic income of the economic entity.
d. To provide quantitative financial information about an entity that is useful in making economic decision.
11. It is the body authorized by law to promulgate rules and regulations affecting the practice of the accountancy
profession in the Philippines.
a. Board of Accountancy
b. Philippine Institute of Certified Public Accountants
c. Securities and Exchange Commission
d. Financial Reporting Standards Council
12. What is the law regulating the practice of accountancy in the Philippines?
a. R.A. No. 9298
b. R.A. No. 9198
c. R.A. No. 9928
d. R.A. No. 9892
13. What are the three main areas in the practice of the accountancy profession?
a. Public accounting, private accounting and managerial accounting
b. Auditing, taxation and managerial accounting
c. Financial accounting,managerial accounting and corporate accounting
d. Public accounting, private accounting and government accounting
14. Which of the following statements is incorrect in relation to the practice of public accountancy?
a. Single practitioners for the practice of public accountancy shall be registered CPAs in the Philippines
b. Partners of partnerships formed for the practice of public accountancy shall be registered CPAs in the
Philippines
c. The Securities and Exchange Commission can register any corporation organized for the practice of
public accountancy
d. The Professional Regulation Commission upon favorable recommendation of the Board of Accountancy
shall issue certificate of accreditation to CPAs in public practice provided the registrant has acquired a
minimum of three years of meaningful experience in public practice
15. What is the primary service of CPAs in public practice?
a. Auditing
b. Taxation
c. Managerial accounting
d. Contollership
16. Accountants employed in entities in various capacity as accounting staff, chief accountant or controller are
said to be engaged in
a. Public accounting
b. Private accounting
c. Government accounting
d. Financial accounting
17. It is the area of the accountancy profession encompasses the process of analyzing, classifying, summarizing
and communicating all transactions involving the receipt and disposition of government funds and property
and interpreting the results thereof.
a. Internal auditing
b. External auditing
c. Private accounting
d. Government accounting
18. The Continuing Professional Development is required for
a. Renewal of CPA license
b. Accreditation to practice the accountancy profession
c. Both renewal of CPA license and accreditation to practice the accountancy profession.
d. Neither renewal of CPA license nor accreditation to practive the accountancy profession
19. How many CPD credit units or CPD credit hours are required?
a. 60 credit units each year for three years
b. 20 credit units each year for three years
c. 60 credit units for three years which may be earned in any of the three years
d. 15 units each year for three years
20. Who is permanently exempted from the CPD requirement for the renewal of CPA licence?
 a. A 60-year old CPA
b. A 65-year old CPA
c. A CPA practicing the profession abroad during the period of stay
d. A CPA studying abroad during the period of stay
21. It is the standard-setting body in the Philippines at the present time.
a. Accounting Standards Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council
22. Which of the following statements is true regarding the FRSC?
a. The FRSC is created by PRC upon recommendation of BOA to assist BOA in carrying out its powers and
functions under R.A. No. 9298
b. The FRSC shall be composed of 15 with a Chairman and 14 representatives
c. The Chairman and members of FRSC are appointed by PRC upon recommendation of BOA and shall
have a term of three years renewable for another term
d. All of the statements are true
23. All of the following are represented in FRSC, except
a. Board of Accountancy
b. Securities and Exchange Commission
c. Commission on Audit
d. Department of Budget and Management
24. The Philippine Financial Reporting Standards collective include
a. PFRS corresponding to IFRS
b. PAS corresponding to IAS
c. Philippine Interpretations corresponding to IFRIC and SIC Interpretations and Interpretations developed
by PIC
d. All of these are included in Philippine Financial Reporting Standards
25. It is a global phenomenon intended to bring about transparency and a higher degree of comparability in
financial reporting in order to achieve the goal of one uniform and globally accepted financial reporting
standards.
a. IFRS
b. Borderless accounting
c. World trade
d. Information technology
26. The International Accounting Standards Board was formed
a. To enforce IFRS in foreign countries
b. To develop a single set of high quality IFRS
c. To establish accounting standards for multinational entities
d. To develop accounting standards for countries that do not have their own standard-setting bodies
27. The IASB publishes standards called
a. International Accounting Standards
b. Financial Reporting Standards
c. International Financial Reporting Standards
d. Statement of Financial Accounting Standards
28. The IASB employs a “due process” system which
a. Is and efficient system for collecting dues from members
b. Enables interested parties to express their views on issues under consideration
c. Identifies the accounting issues that are the most important
d. Requires that all CPAs must receive a copy of IFRS
29. What is “due process” in the context of standard-setting by IASB
a. IASB operates in full view of the public
b. Public hearings are held on proposed standards
c. Interested parties can make their views known
d. All of these are part of due process in standard-setting
30. IFRIC Interpretation issued by IASB
a. Are considered authoritative and must be followed
 b. Cover newly identified financial reporting issues not specifically addressed
c. Cover issues where unsatisfactory or conflicting interpretations have developed
d. All of these are true about IFRIC Interpretations
31. Financial accounting is considered with
a. General purpose reports on financial position and financial performance
b. Specialized reports for inventory management and control
c. Specialized reports for income tax computation and recognition
d. General purpose reports on changes in share process and future estimate of market position
32. Financial accounting can be broadly defined as the area of accounting that prepares
a. General purpose financial statements to be used by parties internal to the entity
b. Financial statements to be used by investors
c. General purpose financial statements to be used by parties both internal and external to the entity
d. Financial statements to be used primarily by management
33. Financial accounting is the area of accounting that emphasizes reporting to
a. Management
b. Regulatory bodies
c. Internal auditors
d. Creditors and investors
34. Managerial accounting is the area of accounting that emphasizes
a. Reporting financial information to external users
b. Reporting to the SEC
c. Combining accounting knowledge with an expertise in data processing
d. Developing accounting information for use within an entity
35. A basic feature of financial accounting is
a. Direct measurement of economic resources and obligations and changes in them in terms of money and
sociological and psychological impact
b. Direct measurement of economic resources and obligations and changes in them in terms of money
c. Direct measurement of economic resources and obligations and changes in them in terms of money and
sociological impact
d. Direct measurement of economic resources and obligations and changes in them in terms of money and
psychological impact
36. Generally accepted accounting principles
a. Are accounting adaptations based on the law of economic science
b. Derive their credibility and authority from legal rulings and court precedents
c. Derive their credibility and authority from the national government through the financial reporting section
of the SEC
d. Derive their credibility and authority from general recognition and acceptance by the accountancy
profession
37. Which of the following statements best describes generally accepted accounting principles
a. The accounting principles have been formulated in the public sector
b. The accounting principles have been developed on the basis of such factors as usage and practical
necessity
c. The accounting principles are the same as laws within our legal system
d. The accounting principles do not apply to small and medium-sized entities
38. People application of accounting principles is most dependent upon
a. Existence of specific guidelines
b. Oversight of regulatory bodies
c. External audit function
d. Professional judgment of CPA
39. Once an accounting standard has been established
a. The standard is continually reviews to see if modification is necessary
b. The standard is not reviewed unless the Securities and Exchange Commission make a complaint
c. The task of reviewing the standard to see if Institute of Certified Public Accountants
d. The principle of consistency requires that no revisions ever be made to the standard
40. The singularly unique function performed by independent Certified Public Accountants is
a. Tax preparation
b. Management advisory services
c. The attest function
d. The preparation of financial statements